Forex News

Essential to successful Forex trading is keeping abreast of the Forex news. Forex news or Forex related news includes all things that can affect currency rates. Traders traditionally follow the comments and pronouncements of central bank figures, the US Federal Reserve chairman, and policy makers in the so called G7 countries. Often times the promise or threat of action by the Japan central bank US Federal reserve, or European central banks will be sufficient to affect Forex rates and these entities do not really need to act at all. Successfully anticipating market intervention or the threat of intervention can gain profits for Forex traders.

Employment reports are a staple of the Forex news. The US non-farm payroll report is closely watched as it helps drive the value of the dollar. The dollar goes up with increased employment and down with a fall in employment. Because over 85% of Forex trades include the US dollar it is critical for traders to track US employment and the dollar.

Sovereign debt is a major factor in the current Forex news. There are two gigantic debt issues affecting Forex trading. The so called PIIGS sovereign debt issue has plagues the European Community and affected the price of the Euro versus other currencies for nearly two years. Portugal, Italy, Ireland, Greece, and Spain all have been at risk for default on their national debts. The EU’s stronger economies, Germany and France, have had to come to the rescue with loan extensions and loan guarantees. As this situation has played out in the Forex news the Euro has both risen and fallen depending upon the circumstances.

Across the Atlantic the USA has had its own debt dilemma. In an attempt to stimulate the US economy, and to a degree the world economy, the US has added a trillion dollars or so to its debt burden which now stands in the neighborhood of $15 Trillion. A game of “chicken” played out on Capitol Hill recently as “Tea Party” right wingers of the Republican Party insisted on drastic measures to constrain the US debt in return for their votes in extending the US debt ceiling in order for the government to continue to function. Forex markets as well as the stock markets of the world reacted negatively to this Forex news. In fact the debt rating agency, Standard and Poor’s reacted by dropping the AAA, perfect, debt rating of the US government. This action triggered a selloff in stocks across the globe but, paradoxically, caused traders to buy more US bond debt and drive down interest rates on US treasuries.

The Japanese earthquake and tsunami this year was not only a human disaster but also a factor in the Forex news. The general consensus was that the Yen would fall due to the expected huge reconstruction costs in Japan as well as damaged industrial capacity. Surprisingly, for some, was the fact that the Yen rose in value. This is because many Japanese agencies and private investors had been involved in the so called Yen carry trade and had invested overseas from Japan to take advantage of higher interest rates. When these folks sold US Treasuries and other offshore investments they converted their dollars, Euros, and Swiss francs back into Yen which drove the price of Yen up. The Forex news carried news of pronouncements by G7 financial ministers that there would shortly be a concerted market intervention to contain the price of the Yen and the market stabilized. In all of these situations traders who can correctly anticipate market reaction will tend to prosper by following the Forex news.